Price on Carbon May Be Sweet Spot for Midwest Grid Operator

Setting a price on carbon emissions could be the most effective way for operators of power plants in the Midwest to comply with U.S. EPA's Clean Power Plan, according to a senior executive with the region's grid operator.

Allowing "for the formation of some sort of price for generating an emissions amount of carbon" would mirror what happens now in the Midcontinent Independent System Operator with regard to sulfur dioxide emissions, said Todd Ramey, vice president for system operations and market services.

MISO runs the electric grid serving all or parts of 15 states ranging from the Canadian border to the Gulf of Mexico.

"Today, there is a monetary opportunity cost of producing or choosing not to produce a ton of SO2; a price that is relatively transparent and fungible that everyone knows," said Ramey during a recent interview at MISO's Carmel, Ind., headquarters.

"The generators know that if they consume or produce SO2 they're consuming those credits -- it's a mass-based approach for implementing SO2 reductions.

"If we were to adopt a very similar approach for carbon, there's no reason to expect that it wouldn't work equally, as well," Ramey said.

A carbon price "would allow us to avoid re-balkanizing our grid and it would allow easy integration into current [regional transmission organization (RTO)] processes that have driven billions of dollars of savings and every day improved reliability for the bulk electric system.  So, yeah, we certainly see that that would work," he said.

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